Monday, July 21, 2008

Adam Smith on Nanny-Minded Governments

Philip Johnston writes in The Daily Telegraph (21 July) UK; HERE:

‘Billions wasted and they just shrug it off’

For an economic historian brought up in Kirkcaldy, Gordon Brown seems remarkably indifferent to the writings of that town's greatest son, Adam Smith.
"It is the highest impertinence and presumption in ministers to pretend to watch over the economy of private people, and to restrain their expense," Smith wrote in The Wealth of Nations.
"They are themselves always, and without any exception, the greatest spendthrifts in the society."

In his wildest dreams, Smith could not have imagined just how spendthrift they could be. UK public sector net borrowing for the first three months of the financial year was at £24.4 billion, the highest quarterly since records began in 1946.”

A fine article it is too about the problem of overspending. The problem is exacerbated by the relentless, widespread, and almost irresistible pressure right across the institutions of the country, of which the apparatus of government is both the initiator and the sympathetic receiver of recommendations, to extend the regulatory intervention habit.

This morning on my daily (well, almost daily) early walk, I heard a ‘Chief Executive’ of ‘Alcohol Concern’ making a plausible case on 'Five Live radio' for new regulations of the night club, club and pub business (apparently worth millions) to ensure that they ‘don’t serve alcohol’ to under 18s, ‘don’t serve alcohol’ those who have ‘too much to drink’ and ‘don’t cut drink prices’ to encourage over-drinking, and ‘to be drunk in public’.

Moreover, a ‘new regulatory body is to be set up’ to implement standards, to educate business owners in the new regulations and to ensure that they ‘train their staff properly in the regulations’.

I kid you not!

The fact that the offences ‘serving under 18s’, ‘serving drunks’, and ‘encouraging over drinking’, and being drunk in public’ are already illegal and there are stiff legal penalties if prosecuted and found guilty. Moreover, untrained staff are not a defence for breaches of these laws.

So why do we need a new regulatory body, with an executive, senior managers, inspector staff, training staff and all the expenses per head, plus rent, buildings, travel, and accommodation – probably not costing less than £15-20 million a year – and for every year into the distant future?

Adam Smith was right.

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” (WN IV.ii.10: p 456)

The penchant for using taxpayers’ money to interfere in the application of existing laws with new layers of legal regulation is now endemic. The difference with Smith's day is that governments now devolve their interference through regulatory bodies, which spend taxpayers’ money (which remember also comes from poor people too), carry out their tasks to a variable standard (usually promoting yet more and tighter regulation), and they become less accountable for their failings that match their inadequate achievements.

Apply existing laws! That's why they were passed in the first place.


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